Reduction in HECS Debt Bonus.

The early repayment bonus is about to worsen for students with a Higher Education Contribution Scheme (HECS) debt. 

After 1st January 2005, the discount on the voluntary repayment of a HECS debt will reduce from 15% to 10%.

Most students who enrol to study in higher education institutions are required to pay fees (contribution).  A choice exists to make an upfront payment (in excess of $500) which attracts a 25% discount, or agree for the government to pay the contribution and for that to be repaid through the tax system.

Interest is added to the debt ?? although it is calculated in the form of indexation.

The repayment is required once the students?? taxable income exceeds $25,348 (2003/04 figure).

Students/former students can make a voluntary reduction of their HECS debt (i.e. other than the compulsory collection via their tax return) and receive a bonus of a further 15% reduction.

This can be particularly smart thinking if your debt is likely to be paid off during this year anyway.

Not many students/former students take advantage of this opportunity, but it is a significant benefit.  Anyone with balances that are likely to be cleared this year should take this last chance to obtain the 15% discount (read 15% return on investment) before 1st January 2005.  Everyone else should consider if this may be cost effective.

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